Tata Technologies IPO fully subscribed within an hour of opening
What's the story
The much-awaited initial public offering (IPO) of Tata Technologies saw an impressive response on the first day of bidding on Wednesday.
Within the first hour, almost all portions were booked, with non-institutional investors (NIIs) and qualified institutional buyers (QIBs) leading the way, followed by retail investors.
At the time of writing, QIBs subscribed 2.78 times, NIIs subscribed 5.68 times, and the retail portion was booked 3.13 times.
This marks the first IPO for the Tata Group in nearly two decades.
Details
Price band and current GMP
The issue is valued at Rs. 3,042.51 crore and will be open for bidding until November 24.
The price range is set at Rs. 475 to Rs. 500 per equity share and the lot size is 30 shares. That means retail investors need a minimum of Rs. 15,000 to apply for the issue.
According to investorgain.com, the grey market shows a positive trend, with shares trading at a premium of Rs. 365. It may list at Rs. 865 (up 73%).
Details
Key details about the IPO
The IPO consists of a 100% offer for sale (OFS). The allotment date is November 30 and the listing will happen on December 5.
In the anchor round, Tata Technologies secured approximately Rs. 791 crore from Fidelity, HSBC, Goldman Sachs, JM Financial MF, Kotak MF, Axis MF, Motilal Oswal, Edelweiss MF, and Mirae Asset.
What Next?
Analysts' recommendations
Arun Kejriwal, founder of Kejriwal Research and Investment Services, suggests subscribing to the IPO due to its appealing pricing and potential for short to medium-term appreciation.
Rajesh Sinha, Senior Research Analyst at Bonanza Portfolio, also recommends subscribing for medium to long-term perspectives as the IPO is undervalued compared to its peers.
Prashanth Tapse, Senior VP of Research at Mehta Equities, gives a 'subscribe' tag for long-term prospects and strong listing gains due to investor-friendly pricing.
Insights
Fair pricing and strong financials
Anand Rathi advises a 'subscribe for long-term' rating for the IPO, stating that the company is fairly priced at a P/E of 32.5x with a market cap of Rs. 20,283 crore post issue of equity shares and a return on net worth of 20.8%.
SBI Securities also recommends subscribing to the issue, citing relatively cheaper valuations and growth opportunities in the ER&D sector.
Ventura endorses subscribing to the IPO, considering the growth opportunities and robust fundamentals of Tata Technologies.
Facts
Company's key strengths and financial performance
Tata Technologies is a pure-play manufacturing-focused engineering research and development (ER&D) company, primarily concentrating on the automotive industry.
The company's key strengths include differentiated capabilities in new-age automotive trends like electric vehicles, deep expertise in the automotive industry, and a global delivery model enabling intimate client engagement and scalability.
For the six months ended September 2023, the company's total income rose 35% YoY to Rs. 2,587 crore, while net profit increased by 36% to Rs. 352 crore.